Bitco Gen. Ins. Corp. v. Acadia Ins. Co.

• Decision Date: 16 December 2019
• Docket Number: CIVIL ACTION NO. 1:18-CV-526
• Citation: 427 F.Supp.3d 838
• Parties: BITCO GENERAL INSURANCE CORPORATION f/k/a Bituminous Casualty Corporation, Plaintiff, v. ACADIA INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Eastern District of Texas

427 F.Supp.3d 838

BITCO GENERAL INSURANCE CORPORATION f/k/a Bituminous Casualty Corporation, Plaintiff,

v.ACADIA INSURANCE COMPANY, Defendant.

CIVIL ACTION NO. 1:18-CV-526

United States District Court, E.D. Texas.

Signed December 16, 2019

William David Farmer, Curney Garcia Farmer Pickering & House, San Antonio, TX, for Plaintiff.

James Price Collins, Ashley F. Gilmore, Wilson Elser Moskowitz Edelman & Dicker LLP, Dallas, TX, Ross Holiday Jones, Clark Hill Strasburger, Beaumont, TX, for Defendant.

MEMORANDUM AND ORDER

MARCIA A. CRONE, UNITED STATES DISTRICT JUDGE

Pending before the court are Plaintiff Bitco General Insurance Corporation's ("BITCO") Motion for Summary Judgment (#16) and Defendant Acadia Insurance Company's ("Acadia") Cross-Motion for Summary Judgment (#17) wherein the parties seek a declaratory judgment on whether Acadia owes a duty to defend and to pay attorney's fees for breach of contract to Brickfield Builders, Inc. ("BBI") with respect to the following state court proceeding: Cause No. CV1510024, City of Liberty v. GTT, Inc., and Edwards Associates, PLLC , and Third-Party Defendants¹ ; in the 75th Judicial District Court of Liberty County, Texas. Having considered the pending motions, the submissions of the parties, the pleadings, and the applicable law, the court is of the opinion that BITCO's Motion for Summary Judgment should be DENIED and Acadia's Cross-Motion for Summary Judgment should be GRANTED.

I. Background

This insurance coverage dispute arises from a state court proceeding in which the City of Liberty ("the City") alleged faulty construction and design of additions to the Liberty Municipal Library ("the Library") located in downtown Liberty, Texas. The City contracted with Edwards Associates, PLLC ("Edwards"), to provide architectural services and G.T.T., Inc. ("GTT"), to manage the construction. GTT, as the general contractor, subcontracted with BBI to provide a complete masonry system. In the Original Petition filed in the underlying litigation, the City alleged that the Library was not constructed as designed, which led to water infiltration, serviceability, and aesthetic issues. The City asserted that it has experienced severe problems with the Library that caused the City "to suffer significant past and future economic harm and damages."

The City further alleged that it gave Edwards and GTT notice of defects in a demand letter dated December 17, 2014. The City maintained that it allowed Edwards and GTT the opportunity to assist the City in resolving these problems; however, all attempts failed. On October 9, 2015, the City filed suit asserting the following seven causes of action against Edwards and GTT: Breach of Contract, Negligence, Professional Negligence, Breach of Express Warranty, Breach of Implied Warranty of Fitness for a Particular Purpose, Breach of Implied Warranty of Merchantability, and Texas Deceptive Trade Practices-Consumer Protection Act Violation. On February 9, 2016, four months later, GTT filed a Third-Party Petition against all of its subcontractors, which included BBI.

BITCO and Acadia issued commercial general liability ("CGL") policies to BBI. BITCO issued two, one-year CGL policies to BBI, CLP 3 544 712 (10/31/10 to 10/31/11) and CLP 3 561 754 (10/31/11 to 10/31/12), and Acadia issued a one-year CGL policy, CPA 4704107 (10/31/15 to 10/31/16). On June 22, 2016, BBI tendered requests for defense to BITCO and Acadia. On July 29, 2016, Acadia undertook a formal review of BBI's tender of defense. On October 24, 2016, Acadia formally denied coverage because: (1) the Original Petition's allegations did not state a claim within Acadia's policy period; (2) the Original Petition's allegations fell within policy exclusions; and (3) BBI was on notice of these problems prior to purchasing Acadia's policy, causing the fortuity doctrine to apply. On November 3, 2016, BITCO agreed to defend BBI in the underlying lawsuit subject to a reservation of rights.

On March 7, 2017, after BITCO learned of Acadia's declination, BITCO re-tendered BBI's request for defense to Acadia, contending that Acadia impermissibly relied on extrinsic evidence in their declination. On May 23, 2017, BITCO sent another demand letter on behalf of BBI to Acadia, again requesting that Acadia provide a defense to BBI. On July 18, 2018, BITCO sent Acadia a list of all carriers currently providing a defense to BBI.² On October 17, 2018, BITCO, dissatisfied with Acadia's position, filed the instant lawsuit against Acadia seeking a declaration that Acadia owes BBI a duty to defend and that Acadia's refusal to defend constitutes a breach of contract with respect to BBI. BITCO seeks recovery of amounts paid for the defense of the underlying lawsuit and its attorney's fees incurred in this action. The parties agreed to resolve this dispute through Cross-Motions for Summary Judgment, BITCO (#16) and Acadia (#17).

II. Analysis

A. Summary Judgment Standard

A party may move for summary judgment without regard to whether the movant is a claimant or a defending party. See Parrish v. Premier Directional Drilling, L.P. , 917 F.3d 369, 380 (5th Cir. 2019) ; Apache Corp. v. W & T Offshore, Inc. , 626 F.3d 789, 793 (5th Cir. 2010) ; CQ, Inc. v. TXU Mining Co., L.P. , 565 F.3d 268, 272 (5th Cir. 2009). Rule 56(a) of the Federal Rules of Civil Procedure provides that summary judgment shall be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a) ; Parrish , 917 F.3d at 378 ; Hefren v. McDermott, Inc. , 820 F.3d 767, 771 (5th Cir. 2016). The party seeking summary judgment bears the initial burden of informing the court of the basis for its motion and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrates the absence of a genuine issue of material fact. Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Jones v. United States , 936 F.3d 318, 321 (5th Cir. 2019) ; Mabry v. Lee Cty. , 849 F.3d 232, 234 (5th Cir. 2017) ; Davis v. Fort Bend Cty. , 765 F.3d 480, 484 (5th Cir. 2014), cert. denied , ––– U.S. ––––, 135 S. Ct. 2804, 192 L.Ed.2d 847 (2015). To warrant judgment in its favor, the movant "must establish beyond peradventure all of the essential elements of the claim or defense." Dewan v. M-I, L.L.C. , 858 F.3d 331, 334 (5th Cir. 2017) (quoting Fontenot v. Upjohn Co. , 780 F.2d 1190, 1194 (5th Cir. 1986) ); accord Access Mediquip L.L.C. v. UnitedHealthcare Ins. Co. , 662 F.3d 376, 378 (5th Cir. 2011), cert. denied , 568 U.S. 1194, 133 S.Ct. 1467, 185 L.Ed.2d 364 (2013).

Once a proper motion has been made, the nonmoving party may not rest upon mere allegations or denials in the pleadings but must present affirmative evidence, setting forth specific facts, to demonstrate the existence of a genuine issue for trial. Celotex Corp. , 477 U.S. at 322 n.3, 106 S.Ct. 2548 ; see Beard v. Banks , 548 U.S. 521, 529, 126 S.Ct. 2572, 165 L.Ed.2d 697 (2006) (quoting FED. R. CIV. P. 56(e) ); Hassen v. Ruston La. Hosp. Co., L.L.C. , 932 F.3d 353, 356 (5th Cir. 2019) ; Distribuidora Mari Jose, S.A. de C.V. v. Transmaritime, Inc. , 738 F.3d 703, 706 (5th Cir. 2013). The court "should review the record as a whole." Black v. Pan Am. Labs., LLC , 646 F.3d 254, 273 (5th Cir. 2011) (quoting Reeves v. Sanderson Plumbing Prods., Inc. , 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000) ); see City of Alexandria v. Brown , 740 F.3d 339, 350 (5th Cir. 2014). All the evidence must be construed in the light most favorable to the nonmoving party, and the court will not weigh the evidence or evaluate its credibility. Reeves , 530 U.S. at 150, 120 S.Ct. 2097 ; Nall v. BNSF Ry. Co. , 917 F.3d 335, 340 (5th Cir. 2019) ; Tiblier v. Dlabal , 743 F.3d 1004, 1007 (5th Cir. 2014) ; see Hefren , 820 F.3d at 771. The evidence of the nonmovant is to be believed, with all justifiable inferences drawn and all reasonable doubts resolved in its favor. Tolan v. Cotton , 572 U.S. 650, 651, 134 S.Ct. 1861, 188 L.Ed.2d 895 (2014) (citing Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ); Davenport v. Edward D. Jones & Co., L.P. , 891 F.3d 162, 167 (5th Cir. 2018) ; Hemphill v. State Farm Mut. Auto. Ins. Co. , 805 F.3d 535, 538 (5th Cir. 2015) ; Pioneer Expl., L.L.C. v. Steadfast Ins. Co. , 767 F.3d 503, 511 (5th Cir. 2014). The evidence is construed "in favor of the nonmoving party, but only where there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts." Spring St. Partners-IV, L.P. v. Lam , 730 F.3d 427, 435 (5th Cir. 2013) (quoting Boudreaux v. Swift Transp. Co. Inc. , 402 F.3d 536, 540 (5th Cir. 2005) ).

Nevertheless, "only reasonable inferences in favor of the nonmoving party can be drawn from the evidence." Mills v. Warner-Lambert Co. , 581 F. Supp. 2d 772, 779 (E.D. Tex. 2008) (citing Eastman Kodak Co. v. Image Tech. Servs., Inc. , 504 U.S. 451, 469 n.14, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992) ); see Hassen , 932 F.3d at 355 (holding that the court views "the evidence and draw all justifiable inferences in favor of the nonmovant"). "If the [nonmoving party's] theory is ... senseless, no reasonable jury could find in its favor, and summary judgment should be granted." Stearns Airport Equip. Co., Inc. v. FMC Corp. , 170 F.3d 518, 528 (5th Cir. 1999) (quoting Eastman Kodak Co. , 504 U.S. at 468-69, 112 S.Ct. 2072 ); accord Shelter Mut. Ins. Co. v. Simmons , 543 F. Supp. 2d 582, 584-85 (S.D. Miss.), aff'd , 293 F. App'x 273 (5th Cir. 2008). "Summary judgment may not be thwarted by conclusional allegations, unsupported assertions, or presentation of only a scintilla of evidence." Hemphill , 805 F.3d at 538 (citing McFaul v. Valenzuela , 684 F.3d 564, 571 (5th Cir. 2012) ); see Lujan v. Nat'l...